Brian Tierney - Chief Financial Officer and Executive Vice President Charles Zebula - Senior Vice President and Treasurer Michael Morris - Chairman, Chief Executive Officer, Chairman of Executive Committee, Member of Policy Committee, Chairman of American Electric Power Service Corporation, Chairman of Appalachian Power Company, Chairman of Ohio Power Company, Chairman of Southwestern Electric Power Company, Chief Executive Officer of American Electric Power Service Corporation, Chief Executive Officer of Appalachian Power Company, Chief Executive Officer of Ohio Power Company, Chief Executive Officer of Southwestern Electric Power

Michael Lapides - Goldman Sachs Group Inc. Dan Eggers - Crédit Suisse AG Paul Ridzon - KeyBanc Capital Markets Inc. Angie Storozynski - Macquarie Research Paul Patterson - Glenrock Associates Jonathan Arnold - Deutsche Bank AG Andrew Levi - Caris & Company Steven Fleishman - BofA Merrill Lynch Neil Stein - Credit Suisse

Ladies and gentlemen, thank you for standing by. Welcome to the American Electric Power First Quarter 2011 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. And I'd now like to turn the conference over to the Treasurer, Chuck Zebula. Please go ahead.

Thank you, Leah. Good morning, and welcome to the first quarter 2011 earnings webcast of American Electric Power. Our earnings release and related financial information are available on our website, aep.com. The presentation slides are also available on our website. Today, we will be making forward-looking statements during the call. There are many factors that cause future results to differ materially from these statements. Please refer to our SEC filings for a discussion of the factors that may cause results to differ from management's forecast. Joining me this morning are Mike Morris, our Chairman and Chief Executive Officer; and Brian Tierney, our Chief Financial Officer. We will take your questions following their remarks. I will now turn the call over to Mike.

Thanks, Chuck, and welcome to everyone on the phone. It's kind of nice to be the first regulated utility reporting earnings for the first quarter of 2011, particularly with the strong performance we had with our $0.82 a share of ongoing earnings. $0.02 above would appear to be consensus going in, and a full $0.06 above first quarter of 2010 within our service territory. The economy had not recovered at all. Based on what we see today, when we look at cost control of the company, the recovering economy and our jurisdictions and most of our states, particularly in the west, we feel very comfortable about reaffirming our earnings midpoint for 2011 and every bit as comfortable about reaffirming our midpoint earnings for 2012. Brian will give us some granularity on the 2012 number because I know many of you aren't totally convinced that we'll be able to get the work done that we think we can get done. And I would simply remind you that over each of the last seven years, we have reported at or above our midpoint year-over-year, and we see no reason not to believe that to be the case for 2012 as well. When we look at Slide 3, let me talk a moment about the regulatory plans. Rate proceedings, so far, have been quite successful. As you know, about $200 million of the stack of $235 million that we need to secure for our performance in 2011 has already been approved, or will adjust automatically according to rate adjusters throughout our many jurisdictions. The $35 million that remain are fully covered by a number of adjustments that will happen during the year, and other rate cases that will be processed during the year. So we feel very comfortable. Now just as we've done year-over-year-over-year, we'll actually do a little bit better in the rate-making process than we came in with our needs forecasted. Ohio is a very interesting jurisdiction. I know, and many of you are quite concerned about Ohio, and we join you in those concerns. However, we have historically been treated well in Ohio, and we continue to feel that, that will be the case going forward. As you know, this week, the Supreme Court of Ohio addressed the 2009 ESP plan, and decided that 10 of the 13 issues that were raised were insufficiently supported and were rejected. Three of them, instantly enough, were found to be of some concern to the Supreme Court. One, the retroactive ratemaking that they decided was inappropriate based on the rates not being approved until March 18, 2009, rather than the requirement of January 1. I would simply remind you that, that had everything to do with the Commission's decision to take each of the cases of and by themselves. Obviously, because of the way the Senate Bill 221 was written, there is no need for a refund of those monies, but it does tell us quite clearly that our 2012 case will need to be finished this calendar year and in place by the first of the year. The two other issues were sent back to the commission for a remand with an interesting direction. One had to do, as you know, with polar. And it was a question as to whether or not it was the formula-based rate or a cost-based rate. And the Supreme Court simply suggested to the Commission that they needed to give more data because they couldn't find the cost support that they predicated their decision on. That obviously will have some effect on what polar looks like in the 2012 case, but it also sends a crystal-clear message that Supreme Court will spend a great deal of time, making sure that decisions are in the letter of the law that was passed in Senate Bill 221. The other issue that there was some other concern over was the recovery of an environmental recovery system that was predated, the 2009 date. That too was sent back to the Commission for reconsideration, and we believe that inside of the nine enumerated items, even though it has the introductory phrase of "without limitation," the Commission should be able to find plenty of comfort in allowing for the continued recovery of that to the rest of 2011. I don't mean to say for a moment that these aren't issues of concern, but they are issues we think can easily be handled by the Commission on remand. And of course, we'll make those points as we go forward in the remand proceedings at the Commission we'll undertaking -- we'll undertake. When we think about the 2012 ESP, I know there's a great deal of concern over that. And we have filed a number of options and approaches that the Commission can take to find what we think is a very reasonable approach in the 2012 ESP. It really directs itself toward what we think is a balance between very small increases for our customers for '12, '13, and '14, while addressing the issue of very important required returns for capital to be invested. There's been a great deal of confusion over the issue of environmental spend and new generation in Ohio, as we go forward. And I think, if anything, the Supreme Court's decision of this week tells us crystal clear that they will absolutely look to the letter of the law in Senate Bill 221. And to that purpose, let me share with you what we think is a very important language in Senate Bill 221. An Electric Security Plan can have construction work in progress recoveries for costs that are associated if the electric utility demonstrates a need for the new generation and/or a need for the environmental spend. If that has been done under a competitive bid process and allow its approved under Section 4928, 143 B2B shall be non-bypassable for the life of the facility. We find great comfort in that language, and I think the commission should find equal comfort in that language as we go forward. Because again, the Supreme Court made it clear that the letter of the law will be followed. So I know there's been a debate about whether or not those kinds of capital investments can be made, and with that reading and our duty, which will be to demonstrate the need for the new facilities if they are there and/or the retrofitted facilities will allow that to be considered to be non-bypassable for the entirety life of the facility that's built or retrofitted. So we do find some comfort in that decision, and we hope that the Commission does that as well. Let me move to the last point on Slide 3, the environmental update. I won't be specific about the four rules. Three of them are now in hand. We continue have an evaluation of that, and I'll talk more deeply about them as we get to Slide 4. We have yet to see the Coal Ash rule, but we continue to work with our colleagues on the whole notion that we hope it doesn't come out with the absolute hazardous-waste designation. And we will wait for that to happen whenever the EPA decides to come to that conclusion. When we look at the environmental activities, our goal will be to constantly strive for compliance at the end of the day. But the end of the day can be on the current time line that the EPA's orders have issued. That's an issue for us. It's an issue for our states. It's an issue for most of the generation fleet throughout the United States. So we, along with our allies of the other coal-based utilities, our state commissions, our elected officials, as well as our friends in the union and in [indiscernible] Can know much broader sense, we'll continue to argue for a more realistic time line. We don't think that the one year that the EPA could assign to this, as well as the one year that the President could assign to this is even an adequate extension of time to get this done in an orderly fashion. And that will continue to be our advocacy in front of the EPA when we make our comments, but also working with Democrats and Republicans in the House and the Senate to try to the bring some rational approach to that. I think the most important point to be made here is that there is no desire on the behalf of American Electric Power to undo the Clean Air Act or the accomplishments that have been realized over the past years and will be realized in the future. And we think that's an important point. We feel very comfortable that we'll have an opportunity to make those points, and we think that rational approach will ultimately allow for us to have a very achievable approach to that endeavor. You've often asked us for more granularity about the undertaking of what the bills would mean to our fleet. If you'll move you Slide 4, I think it's evident that you can see with 24,685 megawatts of coal-based generation, these rules are incredibly important to our customers, to our employees, to our shareholders and to the states wherein those plants are located. We try to break these down into three principle categories, so that you can get a pretty good idea of how we see the potential impact of all of these rules, as they pertain, to our coal-based fleet. I will note for you that this does not, particularly in the 316(b) issue, address the issues of how that might affect gas-fired facilities going forward, but this is really to be specific about our coal fleet. Fully 42%, 10,317 megawatts have already been retrofitted and are in the performance category that we think makes some sense for us going forward. We've tried to show you that there are, however, capital investments that will need to be made on some of those facilities going forward. And we think that those capital investments are well within a reasonable approach for us to take. On a low case, meaning that some of the comments we'll make about considering retirements of some units at some sites, that to be considered in an overall evaluation of the emissions of that site, in general, would show us the low case of some $766 million are needed to be spent on the overall Air rules, or on the high side, $1,046,000,000. That will allow to have us, have very cost-effective production from those plants as we go forward. The partially exposed plants are 36% of the overall fleet, also had some very interesting numbers going forward. And as you'll look at the top of the slide, you'll see these are capital investments that will need to be done through the year, 2020. Here, we're looking at a total expenditure, could range from a couple of billion dollars to as much as $6 billion. That's about what we have done on most of the 42% of the facilities that we've done over the last handful of years. And lastly, the fully exposed plants. We've been quite clear that we fully intend to retire to the 5,480 megawatts of our overall coal fleet because they are less efficient and have not been retrofitted in any particular way. That leaves us with what we think are very reasonable progress. What we're showing you on the bottom of Slide 4 are additional cost, that will be incurred to replace those 5,500 megawatts of new, probably, combined cycle gas facilities going forward. All of this will be done in a timeline that syncs up with the things that our states feel are important, as well as our Commission. And having an eye always on the impact that will have on the customers and our jurisdictions. Hopefully, looking at the front cover of the Wall Street Journal today, we'll continue to see economic recovery throughout the United States as we're seeing throughout the world. And we'll be able to continue to make these capital investments without having too negative of an effect on our overall customer class. At the end of the day, however, I think it's of an important point to see that our fleet is no different than everyone else's fleet. And that our plants will continue to stack up at the end of the day in the dispatch order that they really do before going into these capital investments because everyone will be required to make the same kinds of capital investments. Many stations will be shut down. We think that will work to the benefit of our capacity fees going forward, as well as our off-system sales going forward. So we know this is an issue. It does have an appropriate name called, the train wreck. Although out of respect for my colleagues in the Train business, it really isn't a front of coal power production in the United States. But it's done right with an appropriate timeline, it's very handleable for our company, and we would think everyone else. When we look at our rate stack in the jurisdictions where we do business, we'll be within 80% of the average rate in a state like, Indiana, to 100% of the average rate in the state like, Kentucky, even after having made these investments. We think that, that's a clear message that says, "Difficult, but accomplishable." We'll continue to advocate for reasonable approaches as we deal with our friends at the EPA and in Washington and various states where we do business. With that, I'll turn the call over to Brian to give us much more specificity about the earnings and the impact of some of the load profiles and other things that we've seen. And then we'll look forward to your questions and answers. Brian?

Thank you, Mike, and good morning, everyone. This morning, we'll review year-on-year reconciliation of first quarter results. We'll look at low trends. We'll review drivers for the balance of the year and 2012 earnings guidance and get to your questions as quickly as possible. Turning to Slide 5. You'll see that ongoing earnings for the first quarter of 2011 were $392 million or $0.82 per share. This is $27 million higher than the same period last year, in which AEP earned $365 million or $0.76 per share. Here are some highlights for the quarter-on-quarter comparison: Weather was unfavorable by $20 million or $0.03 when compared to last year, however, weather was actually favorable by $20 million when compared to normal; retail margins were down $0.02 per share or $17 million and were primarily associated with lower residential usage and realization, which were somewhat offset by increased industrial usage. We will provide some more detail on this on the next two slides. Nonutility operations net was lower by $0.01, primarily due to lower earnings from generation and marketing. This was the result of a forced plan outage at the Oakey [ph] union plant during the cold snap in Texas in the month of February and reduced marketing deal flow. Off-system sales net of sharing improved $0.02 or $12 million, quarter-on-quarter. This result was driven by physical sales, which were up 14% in volume and a 45% increase in physical margins. Capacity sales contributed to the positive comparison. In addition, although AEP/Dayton Hub pricing was down 3% over the same quarter of last year, natural gas prices were down 19%, allowing AEP to dispatch its eastern commodity cycle plants into the PJM market. Operations and maintenance expense accounted for a positive $0.04 per share or $30 million net of revenue offsets, primarily due to our cost-savings initiatives instituted in 2010 and lower store and restoration expenses. In the detail on Slide 15, you'll see that Line 9, O&M expense shows a $1 million increase for the quarterly comparison. This, however, was more than offset by a $31 million increase in revenue from trackers and riders. Rate changes accounted for positive $0.06 per share or $44 million across several jurisdictions. Turning to Slide 6, you'll see on the bottom right-hand panel, that overall, weather-normalized sales were up 2.5% for the quarter. This increase was driven by an increase in industrial load of 7.1% and in commercial load of 1.2% for the quarter. In residential normalized sales, last year's increase was 6/10 of a percent and our estimate for this year is 1.9%. Given the first quarter's results, we may fall somewhat short of that estimate. But as Mike indicated, economic indicators are a positive in much of our service territory. Before we turn to the next slide, let's discuss industrial -- to discuss industrial sales trends, let me give you some color on the economy and our service territories as compared to national trends. Overall, our Western service territories in the State of Arkansas, Louisiana, Oklahoma and Texas are experiencing a reasonable economic recovery, while our seven eastern states are experiencing a recovery in fits and spurts. Estimated unemployment rates for the country, as a whole, are 8.9% for the first quarter of the year compared to 9.4% at our eastern service territories and 8% in our western service territories for an overall AEP unemployment rate of 8.8%. GDP growth for the country is estimated to be in the 2% range for the first quarter of this year, compared to an estimates of 4% in our eastern and western service territories. We believe there are unemployment rates, and GDP growth will meet or exceed U.S. numbers through the balance of the year. On Slide 7, you will see that the top five sectors that account for approximately 60% of AEP's total industrial sales. You'll notice that all five of our top sectors are up for the quarter, led by primary metals, which notched a 12.8% increase quarter-over-quarter. This sector was led by our largest customer, Ormet, which returned to full production from 2/3 production during the quarter. In fact, all ten of our industrial sectors showed improvements for the quarter. With these sales, we have now returned to 90% of our preindustrial sales. Let's turn to Slide 8 and look at the left-hand side of the slide where we talk about our 2011 earnings. As Mike said, we are reaffirming our guidance range of $3 to $3.20 per share. First, let's continue to talk about the economy. As we discussed on Slide 6, our quarterly load growth was greater than our estimated annual rate in our earnings guidance, but was heavily weighted towards the industrial class. This means that businesses in our service territories are putting people back to work. The Bureau of Labor Statistics Economic news release for the month of March confirms this by indicating decreasing unemployment rates in nine of our 11 states. This is an encouraging sign for the underlying economy in our states and for overall electricity sales. In terms of rate increases, as Mike said, we've obtained 85% of what within the estimated guidance. This includes base-rate orders and formula rates throughout our service territories. We have additional rate filings in play that will get us close to the $235 million target that was included in guidance. We are continuing our stringent operations and maintenance expense controls. Our guidance for the year included an O&M expense decrease of $34 million, net of tracker and rider revenue increases. As discussed earlier, we obtained $30 million due to cost savings initiatives and lower storm costs in the first quarter. With these results, we are on track to exceed the annual savings identified in guidance. Our guidance anticipated the customers' switching, primarily in the commercial class at Columbus Southern Power with the result of an incremental loss of load of 14% or $53 million for the year. Although the timing of this load switching is occurring faster than what we had forecasted, capacity and energy sales had partially offset the financial impact, so we remain comfortable with our year-end financial estimate. Off-system sales are ahead of last of last year due to some strength in physical and capacity sales. With the look at the first quarter performance, forward pricing and trading and marketing opportunities, we would anticipate off-system sales to come in somewhat higher than the guidance estimate of $262 million. With our first quarter results within expectations and with the insights that I just provided, we remain confident in our 2011 earnings guidance. Now moving on to the right-hand side of the panel, looking at 2012, our point estimate of $3.25 per share. If you remember, we put this estimate in front of you last fall, and we did so intentionally to demonstrate our confidence in management's ability to grow the earnings of the company. Later this year, we will give you a range around the $3,000.25 per share and more detailed information as we always do. But let me give you some further insights into why we have confidence in our estimate. First, let's talk about a number of components of the recovering economy. So far this year, we are seeing load recovering greater than 2%. As we said, mostly in industrial. Remember, just a 1% increase in load spread proportionally across our customer classes results in an $0.08 to $0.10 per share increase. The recovering economy also impacts off-system sales, and we've seen positive results in the first quarter this year and see signs that this trend will continue. Further, our River Operations group benefits from a recovering economy as well, and this year, is expecting a 2% share increase over 2010 earnings due to increasing grain and coal exports. We also believe this trend will continue. Second, we still have rate cases that will positively impact our results in 2012. These include the Ohio distribution rate case and the Virginia biennial case, as well as additional cases yet to be filed. Third, our Transmission business is actively constructing projects, predominantly in Texas and Ohio. These projects will provide meaningful earnings contributions in 2012. We have also demonstrated our ability to control O&M spending and will remain vigilant in this regard next year as well. Mike has addressed many of the issues in regard to the Ohio ESP filing for 2012. And our belief that the law provides for our ability to invest and recover that investment in the state and the Ohio Supreme Court order from earlier this week supports the strict interpretation of the law and the code that will enable that investment. In conclusion, the investment opportunity at American Electric Power remains strong. A solid, affordable dividend, coupled with achievable earnings growth prospects. We look forward to delivering these results to you in 2011, 2012 and beyond. Thank you for your time and investment in American Electric Power. I will now turn the call over to Leah to begin taking your questions.

[Operator Instructions] First, we go to the line of Dan Eggers with Credit Suisse. Dan Eggers - Crédit Suisse AG: Mike, if I can go to Slide 4, which is very helpful. Can you -- and we look at the CapEx numbers, one clarification question. I'll ask in a more concrete, but the numbers of CapEx, if you want to think about, say the, leased exposed plants, would you add all those numbers together in the high and low columns to get to full compliance? Or is there some redundancy in those numbers? We should just take the high number of each one of those categories is what your exposure would be?

Yes, they surely wouldn't add them together. And I would direct you toward the low side rather than the high side, as we believe we'll continue to do this in a very cost-effective way. Obviously, somewhere in between is the answer. But no, you shouldn't add them together, Dan. Dan Eggers - Crédit Suisse AG: And then of this CapEx, how much is being spent or how much of the program is currently in process right now, or over the kind of the next three to five years spending horizon versus the second half of the decade?

Well I guess, we'll have to have -- better Joe get back with a little more of specificity of that question. Some of it is being done, but I want to make sure we give you a pretty concrete number. Clearly, on the leased exposed plant, we continue to make capital investments as required. We're making some progress of some design activity on the partially exposed. And on the fully exposed, making no capital expenditures on an environmental side, for sure. Dan Eggers - Crédit Suisse AG: And Mike, can you just kind of share why the design activities is happening now, kind of given the fact that the rules have been in variant forms out in the market for a decade or so?

Dan, I think you know that we had done a lot of work on the Cameron Care [ph] rules as they existed and they were vacated in 2009. There's been no real design for the rules that they might come out of the EPA in 2011 or how they might be finalized by the end of the year. And you can see, by the way that they did 316(b) and the way that they looked at some of the issues on the mercury-enhanced rules, they've given us some flexibility. We're going to argue for a little bit more. Our company like American Electric Power, with it is in-house engineering skills. What I don't want my team to do, to be cost effective and to be cost control is to design something that then needs to be redesigned, and then redesign and redesign. My engineers have plenty of talent and plenty of desire to do that, so let me tell you, it takes a lot to stop them from doing all that. But this has been kind of the mantra of some of the utilities and don't have the same endeavors. They keep saying, "Oh everyone's known for 10 years, this is out there." That's just not true. We had gone, and in fact, made capital investments to comply with Cameron Care and many of those have already been approved in our end rates and being recovered. But they are also going to satisfy some of the requirements going forward for these formula rules. So again, I think you are very well aware of the skill sets of the engineering team here at AEP. We're ready to go whenever these rules come out final, and we've got nine of these units done. It takes 48 months to bid them, to design them, to build them, to sync them to the system. To think you can do that in 24 or 36 months is folly. To think that you can do that with the magnitude of what will the need to be done across the country is simply unachievable. So at the end of the day, one way or another , the Federal Government will come to the realization that we can't shut the U.S. economy off, and we got to address the time line that makes sense. We can get everybody to where they want to go environmentally by 2020. That's two or three years beyond what they could do the plan at 2016 or '17. And I've done it in a reasonable way. That's our advocacy, that will continue to be our advocacy. But this whole notion that these things have been out there for a long time is poppycock. Dan Eggers - Crédit Suisse AG: Okay. And I guess, just give one last question, Mike. If I look at the spending on the replacement generation, and you kind of assumed that CCTVs are going to cost you, the ballpark $1,000 of KW. It looks like you only need 1,000 to 1,500 megawatts, 2,000 megawatts of capacity. Did you replace the 5,500 megawatts of exposed call plans? Is that the right thing to read now?

Yes, that's pretty accurate, Dan. Dan Eggers - Crédit Suisse AG: Okay. Thank you, guys.

Yes, you bet.

And our next question is from the line of Paul Patterson with Glenrock Associates. Paul Patterson - Glenrock Associates: Just a follow-up on that last part, why is it that you only need so many gas to replace so many coal? Could you just elaborate a little bit on that?

Paul, when we look at some of the -- when you look at a number of our smaller plants and we'll place that they stack up in the overall dispatch stack, they run not very frequently, particularly with gas prices the way that they are. And I think it would be very difficult for us to go to the state commissions and say, "Let's replace 5,500 megawatts with 5,500 megawatts when the capacity factors are in the 20% and 30% range." Some of it we may have to do more depending on how much renewables we have to do, because as you know, the intermittency of renewables need to be augmented by combined-cycle gas. But when you get to these units and you look at the overall bus [ph] per cost of the power, particularly because of the efficiencies and what we believe to be reasonable gas prices, we think can handle all of our retail load needs going forward with fewer megawatts than the 5,500 we'll take offline. Paul Patterson - Glenrock Associates: And I guess, there's no reliability or -- I guess, you don't see the capacity need for that? It's just pretty much a capacity-factor situation? Is that how we should think about it?

Well that is well as -- as you know, we continue to advocate very strongly for an augmentation of the transmission grid. And if some of that were to be done, you'd have to just simply build fewer megawatts, which is a real cost savings for everyone. And again, we hope that's something that the Federal Government can finally get their arms around. Paul Patterson - Glenrock Associates: Great. Just finally, I just wanted to go over the Ohio Supreme Court ruling. And I mean, if I understand you guys -- if I understand what you're saying, it sounds like you feel that there might be some changes in terms of how the ESP filing might be made, but that you don't expect any quantitative difference? Is that how we should think about this polar formula versus cost or what have you? We shouldn't -- it sounds like it's more of a question of sort of supporting your case as opposed to perhaps augmenting it in terms of significant numbers? Is that -- is my understanding accurate from what your statements are? Is it a little...

Well Paul, there are two ways to look at that. So the whole issue in front of the Supreme Court was that the Commission had really looked at the overall value proposition for the customers of us being a provider of last resort. But in the order, they said that polar was cost based. The argument was that there wasn't any identifiable cost other than this formula that we put there. And because they said it was cost based and there wasn't enough support for that, the Supreme Court came to the only decision that they could. However, as you leave the order, the Supreme Court also said, "That formula is fine, if that's what you'll use. Just tell us that, that's what you used going forward." You may remember also that the Supreme Court said that it's kind of difficult to understand this because American Electric Power hasn't incurred any lost load or customers switching. Well clearly, that's the case today. So we think there's plenty of room on remand for the Commission to satisfy that if they'd like. If they want to go the other side and have a detailed cost demonstration of what it takes to keep units always ready to run whenever people come back, we'll be happy to do that. The only thing we're trying to say is that there's plenty of room on remand for the Commission to handle this in any way that they would like. And we will be fully prepared to respond to whatever their data needs are. Paul Patterson - Glenrock Associates: Okay. And then the residential usage -- for last two quarters, it seems like it's really come in here. This is the, weather or not, normalized number that you see on Slide 6?

Yes. Paul Patterson - Glenrock Associates: Is there a trend here we should be thinking about? I noticed that you guys haven't changed your expectations for 2011. But this is weather normalized and I'm just sort of -- if you could just maybe elaborate a little bit more about what trends you're seeing? And what you think the future might hold for it?

So I think what you're seeing here is a pretty reasonable family response to the overall escalation of a number of prices in the marketplace that the they deal with every day. Food's more expensive, gasoline's more expensive. Many other things are continuing to go forward in a almost uncontrolled basis. So I think customers are, at long last, doing some of the energy conservation that we've felt would come our way eventually. As I've always said, Americans know how to conserve, and they are always driven by their pocketbook, and that's what I think we're seeing. Long term trend though, we aren't seeing less meters, we're seeing more meters. You look at the sales of electric appliances during the fourth quarter of 2010 and the first quarter of 2011, it remains high. So I wouldn't worry about it to a great degree, but there is an effect over both of those quarters. We will watch it very closely, but it doesn't cost us to make any change. One of the nice things that you see on that slide is that, different from our 2010 experience, commercial sales are coming back in a very strong way. We're encouraged by that. That has a lot to do with the unemployment rates going down, people getting jobs. And since they're working all day, they're eating out instead of staying home and cooking. We're seeing some differences, but nothing to be alarmed. Paul Patterson - Glenrock Associates: Okay, great. Thanks a lot.

You bet.

Next, we have a question from the line of Angie Storozynski from Macquarie Capital. Angie Storozynski - Macquarie Research: I wanted to talk again about the environmental CapEx. Could you provide some breakdown of the coal CapEx for Ohio? So what percentage or what portion of this grand total you would have to spend for Ohio?

Sure, so if you -- well, all you need to do is look at those numbers and take the Ohio Power and the Columbus Southern Power Company numbers and break those out. So it'd be probably a pretty direct proportional basis. Look at the megawatts in total, divide it into the dollars in total and you'll get your own answer. Angie Storozynski - Macquarie Research: Okay. And when do you think that we will find out there's a -- if the commission is comfortable with the nonbypassable surcharges for the environmental CapEx and the repowering of your plants in Ohio?

Well whenever they issue the order on the 2012 ESP, which we now know will clearly be in calendar year '11, the schedule calls for all of that to happen toward the latter half of the year. We think something with the overall hearing concluding in July, order could be issued some time near that point in time. We continue to talk to all of the folks about the potential to address some kind of a settlement in the clear message of what that means. But again -- and I don't want to downplay the Supreme Court decision, but what it does say is read the letter of the law. And the letter of law says these kinds of expenses, if demonstrated to be required, are absolutely non-bypassable. Angie Storozynski - Macquarie Research: Do you think that we should draw some conclusions on the decision from the PUCO on Duke's MRO, do you think that there's going to be any takeaway for your ESP from the decision?

No, I don't think so. I think they're totally different, totally different approaches. Angie Storozynski - Macquarie Research: Thank you.

You bet.

And next, we have a question from the line of Michael Lapides from Goldman Sachs. Michael Lapides - Goldman Sachs Group Inc.: Mike, I've got a question for you, just thinking long term. Not one year, two year, not 2012, but maybe five year, 10 year. I mean, when I try and think out what's normal, normal for AEP just like any other utility should be kind of -- I mean to keep it simplistic rate base map. And then the question of whether you can actually earn or not earn your authorized rate of return. I mean you have one or two nonregulated assets. But the bulk of it is kind of rate-base map. And yet when you talk about the environmental impact and the environmental regulations, you talk about how it should create upward pressure on your capacity fees and on your off-system sales, that doesn't necessarily seem to go in tandem with thinking about the normal for AEP, in terms of like most other regulated utilities, rate-base map. Help me understand this.

Well what I meant by that particular point was that what you'll see inside the PJM, both for the overall bidded price for capacity, as well as off-system sales in the energy prices with you, if you take our 5,500 megawatts of retired station and you multiply that across the region by others who will have the same challenge, those fees will go up. And that's good for our shareholders and obviously, good for the energy send out that we'll have from American Electric Power. But to your point, when I look out five or 10 years, I think this will be a very rate-base oriented company without question. The transmission activities that we're doing are either rate-based at the state level or the federal level as you know with FERC rates that we feel are very appropriate going forward. And I think you'll see, I would hope, based on comments that have been made here by the governor here in Ohio, particularly about the need for jobs created in Ohio and electricity to be produced in Ohio, I think you'll see a much different view, five or 10 years down the road as to how we'll handle these activities here in this state. The governor made a very interesting speech as he swore in the newest member of the Commission, Andre Porter. And when he said Ohio has a choice to either be an energy buyer like California and at the expense of all other neighboring states or to be self-sufficient in energy as he thinks Ohio ought to be. We took great comfort in those statements. Michael Lapides - Goldman Sachs Group Inc.: Got it. And just one quick follow-up. When you think about kind of, not next two to three years, but five to 10 years, which of your subsidiaries actually economically benefit at the bottom line from, let’s say, higher capacity prices? Could you walk us through where that would actually not get taken back or taken away from a regulator as part of a fuel cost?

Well that would go into -- if they're off-system sales, they would go into the sharing formulas that we have throughout all of the jurisdictions. And I don't know that they would change a great deal. One of the things that the Supreme Court said about sharing in Ohio is that system that it has no requirement for that going forward. So we think that the capacity numbers will be affected by the approach we take in the next round in PJM or [indiscernible] whether we're not. So all of those will come to the benefit of all of our eastern jurisdictions, we think, as we go forward.

And next, we go to the line of Jonathan Arnold from Deutsche Bank. Jonathan Arnold - Deutsche Bank AG: Back on the environmental CapEx, I'm afraid, I just -- I'm wondering if you guys could give a little more color on what it is that pushes you from the low to the high end, particularly on some of these bigger numbers? Is it -- how much of that is timing and assumption around timing? And how much of it is technology? And just a little more -- because there's obviously a very big range here you're still talking?

Still the bulk of it would be on the final determination of the EPA that the flexibility that they talked about isn't necessarily real. And the timeline debate that we are making is also unachievable. Because what you'll see on the high side is a seller's market for the welders and facilitators of the design of facilities, as well as the build of the facilities. So we think that when you think of the overall economic impact that clearly is going to be debated in the House and the Senate, it already is on both the Democrat and Republican side of the aisles we think we'll be closer to the low side going forward. So if everyone is out bidding for the same stuff at the same time, it's going to get more expensive. If we've got a longer time line and we can be an early mover because we've already done a lot of environmental study of our stations and their emissions -- and to the earlier question, we've already done a great deal of preliminary design that we know won't change much, we think we'll be an early mover in that space, and that will allow us to continue to be on the lower side. Jonathan Arnold - Deutsche Bank AG: So you've basically taken the proposed rules as they are today and some tolerance around how whether the flexibility will actually play out the way, it's the EPA's position -- and then thinking about kind of timing and competition for getting things done?

That's exactly the way we try to build the numbers. Jonathan Arnold - Deutsche Bank AG: Okay, thank you very much.

You bet.

And next, we go to the line of Paul Ridzon from KeyBanc.

Can you just tell us what the latest numbers are for shopping at Ohio Power and CSP?

Yes, Paul, this is Brian Tierney. We're at about 12%, 12.7% of total CSP load right now. And as you know, we expected to see that ratably over the year, and guidance go to about 17%. One of the reasons we're not overly concerned about that is we think that there's more switching up front as some of that lower hanging fruit is taken off by some of the competitive retail suppliers. And we think that, of the people who will stay, they're becoming a larger percentage of the remaining pool. We're also seeing, as I mentioned earlier, some capacity and energy offsets in terms of sales that we're able to make to help financially offset the customers who are leaving our system. So while the percentage is higher than what we'd forecasted at this time of the year, the financial impact is not commensurate with that higher percentage. Paul Ridzon - KeyBanc Capital Markets Inc.: And these capacity energy offsets, are they better than you were anticipating when you first kind of thought about this?

They are better than what we thought about. Paul Ridzon - KeyBanc Capital Markets Inc.: What's driving that?

Some of the things that we talk about in off-system sales, in terms of the heat rates being higher than what we thought in the market. So as we're able to dispatch our units that aren't being dispatched for use of our own load or are unable to take those into market, that's higher than what we thought. And just in terms of volume, as some of those customers leave us and they're paying capacity payments, they're exceeding where we thought we'd be at this time, year-to-date, associated with the volume that's being served by competitive suppliers. Paul Ridzon - KeyBanc Capital Markets Inc.: And when you look at megawatts that you've won in other territories versus what you've lost, how should we think about that?

Well we're doing reasonably well in that activity also, Paul. It looks like 1.5 million megawatt-hours, so we continue to have some success. And we'll continue working there. So it's almost like the old telephone game of customers call and say, they're leaving. And we offer them an equally attractive rate or something even a bit higher than the competitor because over the years, we've treated these customers pretty well, and they know that. So we're seeing some success in our retail operation. Then we continue to be aggressive in other jurisdictions other than our own. Paul Ridzon - KeyBanc Capital Markets Inc.: And then just what's the latest thinking on PATH?

The latest thinking on PATH? Paul Ridzon - KeyBanc Capital Markets Inc.: Yes.

We're ready, willing and able to go forward whenever the PJM wakes up and makes a decision that makes sense. Paul Ridzon - KeyBanc Capital Markets Inc.: Kind of, what's your outlook as to when PJM could do that or what's your timeline?

Well as -- well, let's go back to one of the earlier questions, why do you need to replace 5,500 megawatts with about 1,000 megawatts combined cycle gas? The PATH project would allow for rationalization of facilities being built throughout the PJM to handle the impact of the potential premature offline reality that will come from the EPA rules. So clearly, things are lining up to that project being done. It has always made sense, and we believe that it will always make sense. We aren't spending a penny on it right now, however, because it's crystal clear that the way PJM sees it, they don't think they need it until 2020. We think time will demonstrate that it needs to be a little bit earlier than that. And we stand ready to move forward on that project, with or without our current partners. Paul Ridzon - KeyBanc Capital Markets Inc.: Do you think PJM has thought hard enough about upcoming retirements?

Well I'll tell you, we had a very interesting meeting with them a week or so ago with their leadership team. And I think they got an eye opener. And there's no question that there will be retirements from these activities. And you also see the arguments in front of the FERC that, please don't make the demand response players actually respond to demand reductions. I mean, how silly can that possibly be? If you're going to manage your demand by people saying, we'll drop offline when peaks are tough, and then they argue that they don't want to be dropped offline. You can't run a farm like that, that's PJM's shortcoming. Paul Ridzon - KeyBanc Capital Markets Inc.: Can't make that up in volume, ha?

Not a chance, not a chance. Paul Ridzon - KeyBanc Capital Markets Inc.: Okay. Thanks a lot, Mike.

You bet.

Next, we'll go to the line of Andrew Levi from Caris and Company. Andrew Levi - Caris & Company: Just going back to Ohio and the non-bypassable charge. I guess, two questions relating to that. #1, I guess, you know you mentioned you're kind of talking to some of the parties, some of the [Technical Difficulty] Ohio Supreme Court decision, has that changed anyone's kind of positions? I mean, I know it's only been a few days, but have you seen kind of the other parties more willing to talk now relating to that?

I wouldn't. It really is too early. I think a lot of folks are still reading it to see what it does to their whole card. But what I quoted to you is verbatim from Senate Bill 221. That's exactly what it says. And we find great comfort in that, we have always found comfort in that. The Commission has not had to address the issue. We've put it in front of them in this ESP, particularly as it pertains to environmental investments. We are, as I mentioned, quite heartened by the words that we heard from Governor Casey. Simply saying that he has no desire for the state of Ohio to become a net importer of electricity at the whims of the neighboring states, who our competing for the same economic development investments and jobs that Ohio will compete for. We feel pretty comfortable about what we're seeing when you look at the elected officials as well as phraseology we heard from some interviews with some of the commissioners as they were being -- taking over the chairmanship as well as joining the commission staff. Andrew Levi - Caris & Company: And clearly, this is a big key component of your entire filing...

It is. Andrew Levi - Caris & Company: As so far as being able to grow earnings going forward and not absorb costs just for the shareholders. How do you kind of -- I mean, I hear what you're saying and I hear obviously what the governor's saying. And you can read between the lines, which is a good thing to do. But what is the strategy between now and the end of year as you go through this filing? I mean, the Commission, at times, has kind of had a mind of its own lately and obviously you have a new Chairman. What's the strategy to try to convince the Commission, beyond obvious, you were trying to work out a settlement to see it your way because as you know, there's a neighboring utility who doesn't see it your way and also has influence within the state. So what's kind of the political/regulatory strategy between now and the end of the year regarding this?

Well I think that the three utilities that want to make capital investments in Ohio see the thing pretty clearly and collectively that capital investment in Ohio is important. We've also all made it very clear that if we don't receive the appropriate message that capital investment in Ohio on the generation fleet, we'll simply not go forward. Stations will be unfortunately shut down. Property taxes will go down, job, unemployment numbers will go up. And so the cheer to the ESP is let's create jobs in Ohio. Let's be self-sufficient electricity, so that we can bring other jobs into Ohio, and let’s put capital works so that the property tax base in the jurisdictions where those stations are located, go up. That's a pretty good cheer against the other one, which is, let's not build anything. Let's have electric rates go higher so that we force jobs out of Ohio. And let's have the cost of electricity go up. Let's cheer for Ohio shrinking. That's not much of a cheer, so we feel comfortable about where we are.

Next, we go to the line of Brandon Nase [ph] from Levin Capital. Neil Stein - Credit Suisse: It's actually Neil Stein from Levin Capital. I had a question on the Ohio Supreme Court opinion. I guess, specifically, the court took issue with this cost justification for the bullet charge. But even if that justification was inadequate, how specifically does that violate Ohio law?

Well, it really doesn't. All it says is that the Commission would have to have another view of how to go about determining what the exact polar charge ought to be. I'm sure you know, Neil, that there are different charges for residential, commercial, industrial customers. They would have to go back through those numbers and simply find some comfort that those are reasonable charges to have. Take a look at Michigan. I know a lot of you follow other states. We do business in Michigan, so we're pretty familiar with that. You can't just have a fleet sitting around and putting no capital to work on it, and then when all of a sudden, 22% of your commercial load decides to come home all on the same day because other suppliers have failed to perform, you just can't turn it around like that. So provider of last resort is something that we take very seriously as do all of the other utilities here in Ohio. And doing it on a standing basis, as we're required to do, has cost associated with it. We can demonstrate those. We tried to demonstrate the value proposition in the overall formula that we presented. And the Supreme Court said pretty clearly that if that's the way you'd like to go commission, just tell us that on remand. So Commission has this in their hands. We think that they'll be reasonable about how to go about doing it. And we will be required to just file those charges. Or they'll get adjusted, and if they do, they do. Neil Stein - Credit Suisse: But back to the court-specific objection when you actually read SB 221, it seems like the PUCO has very broad discretion to allow all sorts of charges and doesn't even necessarily need to provide justification, at least, for SB 221.

Well remember, when you read the case, what they said to the Commission in earlier cases about polar, was that they needed to be somewhat specific about how they came to the determinations. And what the court is saying to the Commission here, not that what you've done is wrong or violative of 221, it's just that you're telling us you're basing it on cost, yet when we look at the record, we do not see an adequate support for the cost that you say that you're basing it on. However, we see this formula and if the formula is what you determine to be the base of it, that's fine with us. Just tell us that. So it isn't illegal. That's why they remanded it rather than fixed it themselves. They simply said, you need to give us more information so we can see a clearer path on the logic for the decision that you made. Neil Stein - Credit Suisse: The issue is not that, what PUCO did, violates SB 221. It more violates some earlier Supreme Court opinion on polar charges?

No, no. It kind of -- again, the phraseology in the order itself for the 2009 ESP says, we are basing the polar charge on costs, as well as the protection that it yields to the customers. But the cost base of polar will be the X, Y and Z for the three classes of customers. And the record just simply doesn't have a full portrayal of what those costs are. So there have been a number of appeals already determined on the 209 ESP by the Supreme Court. And in those, they simply have continued to send messages to the Commission. 221 gives you a great deal of latitude without question, but you need to demonstrate to us where your decision falls within the latitudes granted. So if you look at the environmental spend in the nine subsets, we would argue and may well yet argue in front of the Supreme Court that the introductory term, "without limitation" means that those nine are enumerated, but that there could be '10, '11 and '12. That was the review that the Commission took. What the Supreme Court in their order was, without limitation, means these nine are very, very broad, and you can stop a lot of things in them if you'd like, but make sure you tell us which of the nine they qualify for and tell us why you believe they fit into that place. So nothing illegal, nothing out of bounds, nothing really wrong. Just give us more data and more rationale for why you made the decisions that you made in the '09 case. And that will spill over we think in a potentially constructive way in the '12 case because the appeals in '12, I would argue, should be less because the specificity by the Commission will be more. Neil Stein - Credit Suisse: Yes, that was pretty much all my questions. Thanks so much.

So we're ready for one final question, operator, if someone's on the line?

Thank you. That will be from Steve Fleishman with Bank of America. Steven Fleishman - BofA Merrill Lynch: Mike, just on the issue of the non-bypassables, I guess the other part of the law says that the ESP needs to be better in the aggregate than an MRO?

Right. Steven Fleishman - BofA Merrill Lynch: Could you give some sense with the exact non-bypassables you're proposing? Kind of, how you show that it's better in the aggregate than an MRO?

Well we think that we've made those portrayals in the filing that we've got in front of the Commission. And that will surely be part of the record as it continues to unfold. When you look at the overall market price over a three-year cycle and you look at the rates that we've included for generation in the ESP and the investments that we might need to make, they keep some of those very cost-effective power plants online. We think that we'll be able to demonstrate that. But it will be detailed, cross-examination testimony in the actual hearings that will go on. So it would take us until about 10:30 to share all of that data with you, and that really isn't accomplishable on a phone call. But that's our challenge, and that's what we're fully convinced we'll be able to do as we've done many times before. Steven Fleishman - BofA Merrill Lynch: And just a -- did you file the exact environmental investments that you think you'd need to make in -- over this period?

No, what we've included was a rider that would adjust for environment investments that are made on a going-forward basis. So the way that, that would happen is we would make a demonstration to the commission that these needed to be done in compliance with whether it's the Transport Rule or the Mercury HAPs rule or 316(b) or CCS. And you would demonstrate that you bid out the concept of who's going to actually implement the construction of the policy. And those would be the touchstones. And once demonstrated, you'd make the rider adjustment. Steven Fleishman - BofA Merrill Lynch: How do you -- how do we know then, whether it's better than an MRO? If we don't know what the numbers are?

Well we'll continue to try to demonstrate that as we go forward with doing it. So it really would be up to the Commission to look at that activity as they go. These are the same decisions that they had to make last time. You could have easily looked at the ESPs that we all did and looked at market rates and forecasted them as they've actually unfolded. We probably would've all been on an MRO over the last couple of years instead of ESPs. So these are difficult decisions for the Commission to make, but we think decisions that they, in fact, will make. Steven Fleishman - BofA Merrill Lynch: Okay, thank you.

You bet.

Thank you for joining us on today's call. As always, our IR team will be available to answer any additional questions you may have. Leah, can you please give the replay information?

Certainly. Ladies and gentlemen, if you would like to access the replay, you can do so, 24 hours a day, seven days a week, by dialing 1 (800) 475-6701 and enter the access code of 196375. International participants may dial (320) 365-3844, again using the same access code, 196375. And it is available after 12:00 p.m. Eastern time today through May 1 at midnight. And that does conclude your conference for today. Thank you for using AT&T Executive TeleConference Service. You may now disconnect.